Payments UK launched a consultation on 13 November 2015 to obtain views on its interim Code of Conduct (the “Code”) for indirect access providers (“IAP”s) to payment systems. The Payment Systems Regulator (the “PSR”) has identified that the market for the provision of indirect access to payment systems may not be working as well as it should. Indirect access is where a payment services provider (“PSP”) is not a direct member of a payment system, but rather is dependent on an IAP such as a sponsor bank, for indirect access. The PSR is tackling this issue itself by way of an ongoing market review into indirect access to payment systems and by issuing a number of regulatory directions.
The Code, in contrast, whilst focussed on the same issue, is owned by the industry and although voluntary, has been signed up to by the four main sponsor banks. Payments UK launched the Code on 1 September this year and is inviting views on it now from across the payment services industry. Feedback from the consultation will be shared with the PSR. The deadline for submitting responses is8 February 2016.
What is Payments UK?
Payments UK is the trade association of the payments services industry which launched in June 2015. It is the successor body to the Payments Council. Its members include banks, building societies and other PSPs.
The Code is a voluntary industry code for IAPs to payment systems.1 It concerns the provision of services by IAPs to indirect PSPs. Indirect PSPs are PSPs that access payment systems through agreements with IAPs, enabling them to provide payment services to their own customers. The code comprises four basic commitments:
- Commitment 1 - entitlement to an agreement for the supply of indirect access
- Commitment 2 - support services & communication of important information
- Commitment 3 - managing the security of supply of service
- Commitment 4 - ensuring security of information
At the date of writing this briefing, Barclays, HSBC, Lloyds Banking Group and RBS, being the four primary IAPs, have confirmed their commitment to the Code and have been registered as Code subscribers.
Payments UK has two principle objectives in running this consultation. Firstly it wants to publicise and promote the Code to the payments industry more broadly. Secondly it is seeking respondents’ views on whether the current commitments should be extended and / or whether new commitments should be added to the Code. Copies of the consultation itself and the form for submitting responses can be located through Payments UK’s website.2
What this means
Payments UK represents the payments industry and is also currently the Code administrator. The Code was developed in consultation with the PSR and the PSR will no doubt be scrutinising responses to the consultation and monitoring consequent changes to the Code. If the Code is viewed as being ineffective, the PSR will no doubt consider if other measures with teeth may be required. We would expect such consideration to fall under the market review.
PSPs with indirect access have the opportunity to use this consultation to influence the terms of the Code and seek to improve the terms on which they obtain indirect access. IAPs will also have an interest in ensuring the Code is robust enough to address the PSR’s concerns and to avoid further regulatory intervention. This consultation is therefore an important opportunity for players across the industry to shape their commercial relationships and the regulatory regime.